Going up? The case for a hard market


The multitude of catastrophic losses borne by reinsurers in the first half of the year started a murmuring that, as the US hurricane season gains momentum, is quickly turning into a cacophony.

Rates must increase, reinsurers proclaim—the only issue is by how much. Cedants, however, seem unwilling to give more than they absolutely must.

The scale and frequencies of catastrophes that occurred in the first quarter of the year forced much of the industry to reconsider its pricing. Lines directly hit by the losses immediately increased. Meanwhile, the more astute reinsurers are pondering the affect of other factors such as capital levels in the industry and non-existent investment returns. Many have concluded that it is time rates across the board started to increase.

“I have been in this business for more than 25 years and I am certain that enough factors are now in place for the market to turn and start to harden,” Swiss Re chief executive Stefan Lippe tells us in an interview on page 10. “We are seeing a turning market now.” He estimates that property rates have already hardened by 5 percent across the board, but there is more to come and much greater rises are needed on casualty business.

Rates, Cedants, Swiss Re, Axa, Allianz Re, Willis Re, Fitch, Solvency II, Reinsurance, Insurance

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